It may have taken two years longer than anticipated, but African Minerals (AMI) finally looks capable of producing around 20 million tonnes per annum (mtpa) of iron ore from its massive Tonkolili mine in Sierra Leone.
The company ended 2013 with a run-rate of 19.2mtpa, having produced nearly 13.1m tonnes throughout the year (of which it sold 12.1m). New chief executive Bernie Pryor expects the group to sell between 16m and 18m tonnes this year - a tad below consensus expectations. “We’re hitting the 20-million-tonne run-rate sporadically, but are not sustaining it yet," Mr Fryer warned. As the company does hit it more regularly, he says costs will fall to $34-36 a tonne, from $44 last year.
African Minerals only generated $13.6m (£8m) of free cash flow in 2013, but this should rise substantially now that most of the phase-one expansion work is complete. Phase-two expansion to 25mtpa hinges on the confirmation of a $990m investment from Chinese commodities-trading group Tewoo; the appointment of a new chairman at Tewoo has pushed back completion, Mr Pryor told us.
Pending downgrades to reflect the softer management guidance, brokerage Investec expects adjusted pre-tax profits of $244m, giving EPS of 42¢.
AFRICAN MINERALS (AMI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 154p | MARKET VALUE: | £ 511m | |
| TOUCH: | 153-154p | 12-MONTH HIGH: | 268p | LOW: 128p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 266¢ | NET DEBT: | 46% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | nil | -17 | -1.4 | nil |
| 2010 | nil | -47 | -14.0 | nil |
| 2011 | nil | -40 | -4.1 | nil |
| 2012 | nil | 4.3 | 10.9 | nil |
| 2013 | 869 | -57 | -16.2 | nil |
| % change | - | - | - | - |
£1=$1.67 | ||||
